What a bunch of bankers

They owe us - and don't let them forget it

Here's an understatement of epic proportions from the Times today:

Bankers at Barclays' investment bank are set to see their pay and bonuses more than double to nearly £250,000 this year as their division reports bumper profits today.

The return of bankers' bonuses is expected to provoke outrage so soon after the meltdown in the financial system, which prompted the worst recession since the Second World War.

"Outrage"? I feel nothing but loathing, hatred and contempt for these people - and as I read the latest research from the respected thinktank, the Centre for Economic and Business Research (CEBR), warning that bonus payments by all banks could hit £4 billion this year, up from £3.3 billion in 2008 and less than a year after the crash, I feel sick to my stomach. It is, as John McFall's Treasury Select Committee and others have pointed out, the greed-fuelled bonus culture that helped cause the financial crisis and subsequent recession, through reckless short-termism and excessive and irresponsible risk-taking.

By the way, if I hear one more supposedly informed person tell me that banks such as Barclays and HSBC are entitled to pay out bumper bonuses and ignore popular opinion because they didn't receive taxpayers' cash, in the form of a government bailout, I think I will scream. The fast forgotten fact is that there would be no banks left standing in this country had the Treasury and the Bank of England not intervened in late 2008, and again in early 2009, to prop up the entire financial sector with significant financial guarantees and a promise that the authorities would never let them fail. One estimate puts the cost to the taxpayer for this wider financial support for the banking system at £1.4 trillion - or £56,000 for every household in Britain.

The BBC's Robert Peston makes a similar point on his blog:

Of course, different banks have required different amounts and different kinds of aid from the state, depending on how reckless they had been in the boom.

But they've all had some succour in the form of taxpayer loans and guarantees - even those like Barclays and HSBC that didn't need to be wholly or partly nationalised.

The banks and the bankers owe us - the taxpayer - for their very survival. We owe them nothing - except, perhaps, eternal contempt for dragging us all into the worst recession in living memory.

 

 

 

 

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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